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Monthly roundup | Investment companies

April 2017

Winners and losers in March

Best performing funds in price terms in March: Worst performing funds in price terms in March: (%) (%) Kubera Cross Border +19.2 Geiger Counter -16.0 Macau Property Opportunities +18.4 Infrastructure India -15.4 Manchester & London +14.7 Polo Resources -13.2 India Capital Growth +10.8 EF Realisation -12.6 F&C Capital & Income +10.3 Golden Prospect Precious Metal -12.3 Threadneedle UK Select +9.6 Globalworth Real Estate -10.6 Fundsmith Emerging Equities +9.2 Prospect Japan -10.4 JPMorgan European Income +9.0 City Natural Resources -10.4 Jupiter European Opportunities +9.0 Better Capital 2012 -9.8 Fidelity Asian Values +8.8 EPE Special Opportunities -9.2 Source: Morningstar, Marten & Co Source Morningstar, Marten & Co

Best performing funds in NAV terms in March: Worst performing funds in NAV terms in March: (%) (%) India Capital Growth +7.5 Geiger Counter -12.1 British & American +7.3 EF Realisation -11.2 JPMorgan European Smaller Companies +6.7 UIL -6.5 Jupiter European Opportunities +6.6 Doric Nimrod Air Three -5.7 Aberdeen New India +6.5 City Natural Resources -5.0 JPMorgan Indian +6.0 Amedeo Air Four Plus -4.8 Marwyn Value Investors +5.7 BlackRock World Mining -4.4 Establishment Investment Trust +5.6 Golden Prospect Precious Metal -3.7 TR European Growth +5.4 JPMorgan Brazil -3.6 Pacific Horizon ++5.1 Premier Energy & Water -3.5 Source: Morningstar, Marten & Co Source Morningstar, Marten & Co

Kubera Cross Border managed to sell its interest in Resources funds fell as the failure of the Republican Planetcast Media during the month. Macau Property health bill called into question Trump’s ability to execute Opportunities published its interims and reported on his ambitions to reflate the US economy. Geiger positive sentiment in Macau. India Capital Growth has Counter was worst hit. The bankruptcy of Westinghouse been doing well as investors’ fears over the impact of may lead to delays or cancellations in the building of new demonetisation have eased (see our note for more nuclear power stations. Prospect Japan reported a poor detail), large cap Indian funds have also been rising. set of results. Better Capital 2012 took a big hit to its Threadneedle UK Select is merging with Henderson NAV as it wrote down the value of its investment in High Income. European and Asian markets did well on Jaeger. Dollar weakness had an impact on the NAVs of the back of positive data, benefitting funds such as funds such as Doric Nimrod Air Three and Amedeo Air JPMorgan European Smaller and Fidelity Asian Four. A dip in the oil price hurt Lonestar Resources, EFR Values. Realisation’s largest investment.

NB: this report has been prepared by Marten & Co and is for information purposes only. It is not intended to encourage the reader to deal in any of the securities mentioned in this report. Please read the important information at the back of this note. QuotedData is a trading name of Marten & Co Limited which is authorised and regulated by the FCA. Marten & Co is not permitted to provide investment advice to individual investors. QuotedData April 2017

Significant moves in discounts and premiums

More expensive relative to NAV (notable changes) Cheaper relative to NAV (notable changes)

Signs of improvement in the local property market helped Prospect Japan’s discount widened even though it is narrow Macau Property Opportunities’ discount. still subject to a takeover bid. EPE Special Manchester & London has been one of the best Opportunities’ discount spiked out towards the end of performing UK equity funds (by virtue of its significant the month but has narrowed since on the back of good overseas exposure). F&C Capital & Income moved results. has been performing back to trading on a premium after a brief period of share fairly well but it may have suffered as investors lost faith price weakness. GLI Finance placed all of its holding in in the Trump growth story. Aberdeen Smaller the SME Loan Fund with new investors and the removal Companies Income’s results showed that it lagged its of this overhang helped narrow the discount. benchmark last year. Bankers’ discount has moved to trade at the bottom of its usual range.

% discount (-ve) or premium (+ve) % discount (-ve) or premium (+ve) 28 Feb 31 Mar 28 Feb 31 Mar (%) (%) (%) (%) Macau Property Opportunities -36.2 -24.0 Prospect Japan -3.6 -12.6 Manchester & London -20.8 -11.1 EPE Special Opportunities -18.3 -25.9 F&C Capital & Income -4.8 +3.0 Fidelity Special Values -2.0 -8.4 SME Loan Fund -9.0 -2.6 Aberdeen Smaller Co.s Income -17.4 -23.5 Threadneedle UK Select -9.4 -3.2 Bankers -2.8 -8.5 Source: Morningstar, Marten & Co Source Morningstar, Marten & Co

Baillie Gifford has been managing investments since 1909. Our success has been built on finding good investment opportunities for clients through extensive independent research. Our fundamental analysis and judgement over the years have helped us to become one of the UK’s largest independent investment management groups with over £145 billion of funds under management and advice as at 31 December 2016*

Baillie Gifford is one of the largest investment trust managers in the UK with a range of seven trusts. We also have an extensive range of OEIC sub-funds and manage investments globally for pension funds, institutions and charities.

*Source Baillie Gifford & Co As with all stock market investments, your capital is at risk ADVERTISMENT

Money raised and returned in March

Money raised in March Money returned in March £m £m Biopharma Credit 607.1 756.5 HICL Infrastructure 260.0 Scottish Investment Trust 94.3 Impact Healthcare REIT 146.2 Aberdeen Frontier Markets 59.8 John Laing Infrastructure 119.5 Mercantile 25.6 Renewables Infrastructure Group 110.0 JPMorgan American 17.7 Source: Morningstar, Marten & Co Source Morningstar, Marten & Co

March saw the launch of two new funds, BioPharma Credit and Impact Healthcare REIT. BioPharma Credit raised $761.9m from investors. It will invest in a portfolio of loans most of which will be backed by royalty payments on

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medical treatments. Impact Healthcare REIT is investing in residential care homes. It has a portfolio of care homes lined up and will issue a further 14m shares when that acquisition goes through. Existing fund, HICL Infrastructure, raised £260m from investors. This is a lot of money to take in from a secondary issue of shares but HICL say that they had applications for three times as many shares as were available. Another infrastructure fund, John Laing Infrastructure, raised £119.5m from a placing, while two renewable energy funds, Renewables Infrastructure and Foresight Solar, raised £110m and £78.5m respectively. Blackstone/GSO Loan Financing, which invests in CLOs (see the glossary on our website for an explanation) is running a new 12-month placing programme. It issued €75m worth of shares in March. Scottish Mortgage, which has just entered the 100 Index, saw its ongoing tap issue raise £35m in March. Regional REIT issued £28m worth of stock as part of a deal it did to acquire a portfolio of properties from Conygar. Duke Royalty issued £15m worth of shares as it was readmitted to trading on AIM. Like BioPharma, it will start making royalty investments. Other notable issuers of stock included Personal Assets, JPMorgan Elect (as it took in money from the M&G High Income rollover – see below for more detail), Finsbury Growth & Income and Custodian REIT.

Alliance Trust shrank by over £750m as it bought back Elliott’s stake in the company and conducted a number of other share repurchases in an effort to keep its discount trading around the 4.75% mark. Alliance wasn’t the only venerable Scottish Trust forced to hand back cash to shareholders. Scottish Investment Trust became the latest fund to buy back shares held by Aviva. Aberdeen Frontier Markets offered all of its shareholders the chance to sell their holding back to the company. The fund reduced in size but it has shifted to investing directly rather than through funds and Aberdeen Asset Management have backed it with their own money (see our note for more details). The usual suspects, including Mercantile and JPMorgan American continued to shrink (JPMorgan American is revamping its investment approach in the hope of improving performance) as well as British Empire, Templeton Emerging, Toro, Impax Environmental Markets, Witan and VinaCapital Vietnam Opportunities – all of which bought back stock worth at least £5m.

Electra is planning a special dividend of £1bn or 2612p pence per share payable in May 2017. Commentators have condemned the move which penalises individual shareholders who hold the company outside of a tax-protected wrapper (such as an ISA or SIPP) and have questioned why the company isn’t making a compulsory redemption of shares instead.

We said goodbye to three funds during March. 60.8% of Aberdeen UK Tracker’s shareholders have opted to take cash rather than roll over into Aberdeen Diversified Income & Growth. In the wind-up of M&G High Income, £166m was repaid to shareholders in cash; £251.8m went to M&G UK Income Distribution Fund; £10m each to M&G Strategic Corporate Bond Fund and M&G Dividend Fund, £7.8m to JPMorgan Elect Managed Growth, £4.4m to JPMorgan Elect Managed Income and £1.8m to JPMorgan Elect Managed Cash. New City Energy is now in liquidation

March’s major news stories – from our website

Portfolio Developments Corporate News • FastForward Innovations said it would exchange its • Foresight Solar announced it would list on the Satoshi stake for Blue Star shares and invested in Johannesburg stock exchange but later changed its mind Nuuvera • did get a listing on the Johannesburg • Epiris made a string of disposals on behalf of Electra stock exchange • Dunedin Enterprise invested in Forensic Risk Alliance • BP Marsh announced a new discount control policy • GCP Asset Backed Income lent against UK residential • All of GLI Finance’s stake in the SME Loan Fund was property place with new investors • JPMorgan Private Equity sold Datamars • BlackRock Latin American said it wanted to extend its • Kubera sold Planetcast Media tender performance measurement period • • Starwood European said two loans had been repaid Fair Oaks Income put forward proposals to extend its life which were approved by shareholders • Marwyn invested in speciality chemicals company, • Wilmcote Aberdeen Frontiers proposals to shift to direct investing were backed by investors • Greencoat UK Wind bought Langhope wind farm • Polar Capital Global Healthcare published some • ICG Longbow announced the repayment of a loan thoughts on its future

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• Amedeo Air Four Plus said it would buy Aibus 350s • Threadneedle UK Select will merge with Henderson • Better Capital 2012 wrote down the value of Jaeger High Income • Duke Royalty has plans to raise capital so that it can be readmitted to AIM • BlackRock Smaller Companies said it wanted to remove the cap on its AIM exposure • Alpha Real Trust intervened in Hansteen’s bid for Industrial Multi Property – the bid became unconditional • JZ Capital extended a credit line • Pershing Square plans to list in London • A small group of shareholders put forward a proposal for a buy-back at Strategic Equity Capital • JPMorgan American’s board and manager said they would revamp its investment approach • ICG Enterprise refinanced its bank facilities Kubera Cross Border sold its interest in Planetcast Media services, raising $22.5m for the company

Property News Managers & Fees • Tritax Big Box REIT secured a new loan facility • Keystone got a new manager • Custodian REIT bought retail property in Chester and • Alan Borrows intends to resign from Seneca sold a property in Peterborough • Jim Campbell is on leave from JPMorgan European • British Land sold the CheeseGrater Smaller • Empiric Student Property got a £10m loan facility • BlackRock Emerging Europe cut its fee • Pacific Industrial bought a logistics warehouse in Leeds • Monks adopted a tiered fee • GCP Student Living bought a building in Bloomsbury • Volta Finance upped directors’ pay • Target Healthcare REIT bought two care homes • Green REIT sold Parkway Retail Park • LXi REIT bought a car park in Sheffield and a Travelodge in Essex • SEGRO launched a rights issue to fund portfolio expansion • MedicX invested in three healthcare centres and said it intended to become a REIT • Intu completed its acquisition of Xanadu in Madrid Alan Borrows, • LondonMetric sold three retail properties and bought co-manager of two warehouses in Leeds Seneca income • Hansteen proposed the sale of its German and Dutch & Growth is to portfolios retire at the end of 2017 • withdrew its incentive plan proposal • Standard Life Property Income sold White Bear Yard and bought an industrial scheme in Bristol • Primary Health Properties is funding a new Irish care centre • Schroder Real Estate sold St Augustine’s courtyard in Bristol

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Income

JPMorgan US Smaller Companies said its brought forward revenue deficit was close to being eliminated. “Based on the current revenue run rate and a significant change in attitude to dividends within US small cap company managements (dividends are now an important part of a company's capital allocation priorities) the Board would expect the revenue deficit to be cleared in 2017 and will then be in a position to consider paying a dividend.”

Similarly, Fidelity Japanese Values’ board said “The Directors do not recommend the payment of a dividend, but, as Japanese companies are beginning to raise their dividend pay-out ratios generally, this is an area which the Board will continue to monitor closely.”

Investment Companies announcing their full year dividends in March Fund Year ended Dividend Change over Revenue / Cover (pence)* year (%) earnings (pence)* CatCo Reinsurance Opportunities 31/12/16 7.18 cents +8.5 9.81 cents 1.37x CatCo Reinsurance Opportunities C shs 31/12/16 5.795 cents n/a 7.12 cents 1.23x Tritax Big Box REIT 31/12/16 6.2 +3.3 6.51 1.05x 31/12/16 8.08 n/a 12.24a 1.51xa Foreign & Colonial 31/12/16 9.85 +2.6 10.6 1.08x Capital & Regional 31/12/16 3.39 +8.7 3.8 1.12x European Assetsb 31/12/16 75.8 +33.9 €(1.07)a n/a Secure Income REIT 31/12/16 5.8p n/ac 11.3 1.95x EP Global 31/12/16 4.3+1.0d +38.7 5.3 1.23x Polar Capital Global Financials 30/11/16 3.55 +9.9 4.16 1.17x

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Fund Year ended Dividend Change over Revenue / Cover (pence)* year (%) earnings (pence)* Witan 31/12/16 19.0 +11.8 22.11 1.16x Murray international 31/12/16 47.5 +2.2 51.2 1.08x Aberdeen Smaller Companies Income 31/12/16 6.85 +3.0 7.34 1.07x JPMorgan Claverhouse 31/12/16 23.0 +7.0 25.3 1.10x Premier Energy & Water 31/12/16 9.70 unchanged 10.91 1.12x 31/12/16 4.17 +25.2 4.34 1.04x Princess Private Equity 31/12/16 €0.54 unchanged €1.20a 2.22xa Real Estate Investors 31/12/16 2.625 +31.3 2.8 1.07x Regional REIT 31/12/16 7.65 n/ae 7.7 1.01x Standard Life Property Income 31/12/16 4.76 +2.5 5.56 1.17x JPMorgan American 31/12/16 5.0 +25.0 5.7 1.14x Henderson High Income 31/12/16 9.15 +1.1 9.93 1.09x City Merchants High Yield 31/12/16 10.0 unchanged 10.5 1.05x BlackRock Emerging Europe 31/01/17 7.5 cents n/a 7.5 cents 1.00x Aberdeen Asian income 31/12/16 8.75 +2.9 9.15 1.05x International Public Partnerships 31/12/16 6.65 +2.5 17.18a 2.58x Dunedin Income Growth 31/01/17 11.7 +2.6 12.55 1.07x Source: Marten & Co, * unless otherwise stated a) The company does not separate its revenue and capital returns in its accounts, this is based on a combined figure. b) The dividend for 2017 has been set at 78.84 euro cents per share, a fall of 16.4% on 2016’s 94.29 cent distribution (which equated to 75.8p). The dividend is set as a percentage of net assets. c) Quarterly dividend payments commenced in August 2016. d) 4.3p plus a 1p special dividend, cover and change relates to ordinary dividend only. e) Regional REIT paid 1p for 2015 but this elated to a period of just 56 days from the launch of the company.

Visit www.quoteddata.com for more on these and other stories plus in-depth research on some funds, the chance to compare similar funds and basic information, key documents and regulatory news announcements on every investment company quoted in London

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Research

In March, we published a note on Aberdeen Frontier Markets, Direct investing, which described how that fund’s investment approach is changing

We published an initiation note on JPMorgan Russian Securities entitled, Russian recovery, where its manager pointed out that, if president trump eases sanctions on Russia, this could provide a significant tailwind for Russian equities

Seneca Global Income & Growth is celebrating five years since it strategy change

We published a note on Martin Currie Closed-End Funds that looked in turn at Securities Trust of Scotland, Martin Currie Asia unconstrained and Martin Currie Global Portfolio

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Our most recent note on Strategic Equity Capital, “Business as usual” commented on the departure of the fund manager and the promotion of Jeff Harris.

Our annual overview note on India Capital Growth, Full steam ahead, looks at the impact of demonetisation on the Indian economy as well as going into the workings of the fund.

The QuotedData guide to investment companies aims to help investors and financial advisers better understand investment companies and help them make better informed investment decisions.

If you want a basic introduction to investment companies or have questions about the first part of the guide, QuotedData’s analysts will be making a presentation over the internet at 2pm on Thursday 27 April. If this is something you might find useful then please click below to sign up on our website.

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QuotedData April 2017

QuotedData is a trading name of Marten & Co which is Edward Marten authorised and regulated by the Financial Conduct ([email protected]) Authority Christopher Bunstead 123a Kings Road, London SW3 4PL 020 3691 9430 ([email protected]) James Carthew www.quoteddata.com ([email protected]) Registered in England & Wales number 07981621 Matthew Read 135a Munster Road, London SW6 6DD ([email protected])

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